Industrial Clusters and Corporate Social Responsibility in Developing Countries: What We Know, What We do not Know, and What We Need to Know

Abstract

This article provides a review of what we know, what we do not know, and what we need to know about the relationship between industrial clusters and corporate social responsibility (CSR) in developing countries. In addition to the drivers of and barriers to the adoption of CSR initiatives, this study highlights key lessons learned from empirical studies of CSR initiatives that aimed to improve environmental management and work conditions and reduce poverty in local industrial districts. Academic work in this area remains embryonic, lacking in empirical evidence about the effects of CSR interventions on the profitability on local enterprises, workers, and the environment. Nor do theoretical frameworks offer clear explanations of the institutionalization and effects of CSR in local industrial districts in the developing world. Other key limitations in this research stream include an excessive focus on export-oriented industrial clusters, the risk that CSR becomes a form of economic and cultural imperialism, and the potential for joint-action CSR initiatives in clusters of small and medium-sized enterprises to offer a new form of greenwashing. From this review, the authors develop a theoretical model to explain why CSR has not become institutionalized in many developing country clusters, which in turn suggests that the vast majority of industrial clusters in developing countries are likely to engage in socially irresponsible behavior.

Corporate Social Responsibility Drivers and Barriers According to Managers’ Perception; Evidence from Spanish Firms

“…(4) The impact of leading corporations [17] based on aspects such as visibility, the publication of sustainability reports [90], foreign partners [86], international diversification [99], etc., is cited in 6.8%, and aspects in favor of CSR related to sectorial trends and private sector-led initiatives [100] are cited in 6.1%. (5) Availability of resources (financial, time-related and human resources): Economic factors such as lack of economic resources [100], a difficult economic situation [86], a situation in which it is difficult to show any significant positive correlation between CSR and the "bottom line" [51], etc., are most commonly cited as barriers, with 9.1% frequency. They are followed by lack of structure and human resources [31] with 7.6%, and lack of time-related resources [37], with 6.1%.…”

“…Difficulty in determining core CSR targets, roles and responsibilities [51] and how to put them into practice it [37] are cited in 5.3% of the papers as barriers. (7) Low institutional interest: The lack of governmental willingness [100] and the lack of official grants [102] are cited in 3.8% of the papers.…”

Industrial Clusters and CSR in Developing Countries: The Role of International Donor Funding

“…Although clusters in developing countries have the potential to facilitate local economic development processes, they have also come under fire for engaging in socially or environmentally destructive activities (Blackman 2006). Evidence indicates that SMEs in leather tanning, foundry, and textile clusters in particular engage in highly polluting activities that threaten the health of local inhabitants and the environment, especially those located in Asia, Africa, and Latin America (Lund-Thomsen et al 2014). Cluster-based SMEs have also been accused of using child and forced labor, paying below poverty-level wages, and generally squeezing workers' conditions in a downward spiral, competing in a ''dirty'' fashion with other local and international producers (Khan 2010).…”

“…That is, there must be clear financial incentives for cluster-based SMEs to invest in social and environmental upgrading, whether in the form of cost reductions (e.g., reduce wasted raw materials), efficiency enhancements (e.g., increased labor productivity), higher prices paid by existing or new CSR-conscious buyers, or compliance with governmental regulations that either force the SMEs to upgrade or close down (Lund-Thomsen et al 2014).…”

“…Perhaps the most extensive consideration of this topic is the recent special issue of Journal of Business Ethics that takes stock of this literature stream. In their overview article, Lund-Thomsen et al (2014) argue that literature on CSR in industrial clusters is fairly limited, concentrated mostly on environmental pollution controls, labor rights issues (and child labor in particular), and poverty reduction. More recently, some efforts seek to conceptualize the promotion of CSR in industrial clusters, such as by identifying how so-called low-road, window-dressing (i.e., clusters that preach but do not practice CSR), and rights-oriented clusters contribute to or undermine the promotion of human rights (Giuliani 2014).…”